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You probably have a will and/or a trust that covers what you want done with your personal assets when you die. But do you have a formal succession plan for your small business?

According to the Small Business Administration, about 90% of businesses are owned by a family. And about 90% of those family business owners believe that their business will be kept in the family when they can no longer run it. However, according to the Family Business Institute, only about 30% of family and businesses survive into the second generation.

Planning for your succession is critically important and has implications for your employees, business structure, assets and tax obligation, but it isn’t easy.

You should think about who you want to take over your business if something happens to you. Choosing someone to replace you as head of your organization may be as simple as appointing a family member who has been working in the business. On the other hand, there may be several people from whom you will have to choose and each may have different strengths and weaknesses. The correct decision is vital; it may cause family conflict and turmoil which, in turn, may impact the continued success or future failure of the company.

Another thing to think about is whether you want to sell your business to family members or just give it to them. This may have tax implications for your estate and for those family members.

If you have partners, do you have a buy/sell agreement with them?

There are several different business succession planning strategies. Make sure you speak with an estate planner who is skilled in this area, explore the options and create the plan that will be the best option for your small business.